Small Business Regulatory Flexibility Improvements Act
- Sponsor
- Sen. Scott, Rick [R-FL]
- Committees
- Homeland Security and Governmental Affairs Committee (primary)
- Last action
- Jul 30, 2026
Bottom line
This bill significantly broadens the scope and strengthens the enforcement of the Regulatory Flexibility Act, aiming to reduce the regulatory burden on small entities and increase agency accountability.
What it actually does
This bill significantly amends the Regulatory Flexibility Act (RFA) to expand the types of rules subject to small entity impact analysis, require more detailed assessments from federal agencies, and strengthen the oversight role of the Chief Counsel for Advocacy of the Small Business Administration. It also introduces a general waiver for civil fines for first-time paperwork violations by small businesses, with specific exceptions.
Proponents argue
Supporters argue that the bill will reduce the cumulative regulatory burden on small businesses, fostering economic growth and job creation by ensuring federal agencies fully consider the impacts of their rules. They contend it increases transparency and accountability in the rulemaking process, preventing regulations that disproportionately harm small entities.
Opponents contend
Critics may contend that the expanded analytical requirements and increased oversight by the Chief Counsel for Advocacy could significantly slow down the federal rulemaking process, potentially delaying critical regulations. They might also argue that the waiver for paperwork violations could weaken enforcement and lead to compliance issues in areas vital for public interest.
The bill is moderately complex due to its technical legal language and numerous amendments to existing statutes, requiring careful reading to grasp the full scope of changes.
Section 2(a), (b), (c), (d), (e), (f), (g)
Expansion of Rules Covered by the Regulatory Flexibility Act
This section significantly broadens the definition of 'rule' under the RFA to include indirect economic effects, beneficial impacts, and certain interpretive rules related to internal revenue laws and recordkeeping. It also expands the definition of 'small governmental jurisdiction' to include Tribal organizations and applies RFA analysis requirements to land management plans and formal rulemaking processes. Additionally, it redefines 'small organization' for nonprofits based on NAICS codes or net worth/employee count.
Supporters argue
Supporters argue that expanding the RFA's scope ensures a more comprehensive assessment of regulatory impacts, preventing unintended harm to small entities and promoting better-tailored regulations. Explicitly including Tribal organizations and land management plans addresses previously overlooked areas of regulatory impact.
Critics contend
Critics might argue that broadening the RFA's reach to include indirect effects and a wider array of rules could create an unmanageable analytical burden for agencies, potentially slowing down or paralyzing necessary rulemaking processes.
Tradeoffs
The bill balances the desire for more thorough regulatory impact analysis for small entities against the potential for increased administrative costs and delays in agency rulemaking.
Section 4(a), (b), (d), (e)
Requirements for More Detailed Regulatory Analyses and Certifications
This section mandates more detailed content for both initial and final regulatory flexibility analyses (IRFA and FRFA). Agencies must now estimate cumulative economic impact, describe disproportionate impacts, and assess impairment of access to credit for small entities. Certifications that a rule will not have a significant economic impact on a substantial number of small entities must include a detailed factual and legal basis with an economic assessment. Agencies are also required to provide quantifiable descriptions of effects or a detailed explanation why not.
Section 5(a), (b), (c)
Expanded Powers of the Chief Counsel for Advocacy (CCA)
This section grants the Chief Counsel for Advocacy (CCA) of the Small Business Administration significant new powers. The CCA is mandated to issue binding rules governing agency compliance with the RFA, and agencies are prohibited from issuing supplemental rules without CCA consultation. The CCA is also authorized to intervene in agency adjudications (excluding those imposing fines/penalties) to inform agencies of impacts on small entities and can file comments on any agency notice requesting comment, regardless of formal rulemaking status.
Section 6(b), (c), (d), (e)
Enhanced Procedures for Gathering Comments and Review Panels
For proposed rules likely to have a significant economic impact, agencies must notify the Chief Counsel for Advocacy (CCA) and provide all relevant materials. The CCA then convenes a review panel, including representatives from the Office of Advocacy, the proposing agency, and the Office of Information and Regulatory Affairs (OIRA). This panel identifies small entities for input and submits a report to the agency and OIRA, assessing the rule's economic impact on small entities, including energy and startup costs, and discussing alternatives. This report becomes part of the rulemaking record.
Section 7(a), (b), (c), (d), (e), (f)
Mandatory Periodic Review of Agency Rules
This section requires each agency to publish a plan for the periodic review of rules that have a significant economic impact on a substantial number of small entities, regardless of whether an RFA analysis was initially performed. All existing rules must be reviewed within 10 years of the plan's publication, and new rules within 10 years of their final publication. The plan must detail outreach to various small business concerns (including those owned by women, veterans, and socially/economically disadvantaged individuals). Agencies must annually report review results to Congress, the CCA, and OIRA, and amend or rescind rules to minimize adverse or maximize beneficial impacts on small entities.
Section 14(a), (b), (c)
Waiver of Fines for First-Time Paperwork Violations by Small Businesses
This section amends the Paperwork Reduction Act to generally prohibit agencies from imposing civil fines on small business concerns for a first-time violation of a requirement regarding the collection of information. A 'first-time violation' means no similar violation with that same agency in the preceding 5 years. Exceptions apply if the violation causes serious harm to public interest, impedes criminal activity detection, relates to tax laws, is not corrected within 6 months, or presents a danger to public health or safety (though a 24-hour correction window may be allowed for health/safety violations).
Expands the RFA's applicability to 'recordkeeping requirements' and redefines 'collection of information' and 'recordkeeping requirement' by cross-referencing definitions from the Paperwork Reduction Act (44 U.S.C. 3502).
Section 2(f)(1), (2), (3)
Why it matters:This is standard legislative practice for incorporating existing definitions by reference to maintain consistency across statutes, rather than being intentionally evasive.
Case for: Supporters would argue this ensures comprehensive coverage of all forms of information burden on small entities, aligning RFA analysis with the broader framework of the Paperwork Reduction Act.
Case against: Critics might argue that expanding the RFA to all recordkeeping requirements, especially through a technical cross-reference, could significantly broaden the scope of analysis without clear guidance, potentially creating an unmanageable burden for agencies.
Estimated impact: Significantly expands the universe of agency actions subject to RFA analysis, potentially affecting thousands of existing and future recordkeeping requirements across all federal agencies.
Prohibits any agency from issuing rules that supplement the RFA compliance rules issued by the Chief Counsel for Advocacy (CCA) unless the agency has first consulted with the CCA to ensure compliance.
Section 5(a)(2)
Why it matters:While technically phrased, this provision represents a significant shift in inter-agency power dynamics, potentially centralizing control over RFA implementation with the CCA.
Case for: Proponents would argue this ensures uniformity and consistency in RFA compliance across all federal agencies, preventing agencies from creating loopholes or inconsistent interpretations of the CCA's overarching rules.
Case against: Critics might argue this provision grants the CCA excessive power over other agencies' internal procedures for RFA compliance, potentially leading to bureaucratic bottlenecks or conflicts when agencies believe their specific context requires unique supplemental guidance.
Estimated impact: Centralizes authority for RFA compliance guidance under the Chief Counsel for Advocacy, affecting the internal regulatory processes of all federal agencies.
Grants the Chief Counsel for Advocacy (CCA) the authority to specify small business size standards for purposes of any Act other than the Small Business Act. It also requires CCA approval for agency-prescribed size standards (except those from the SBA Administrator) and allows the CCA to be joined as a party in judicial review of CCA-approved size standards.
Section 10(a)(2)(A)(ii), (b)(iii), (d)
Why it matters:This is a technically phrased but substantively significant shift in authority, centralizing control over small business definitions across the federal government with the CCA.
Case for: Proponents argue this ensures consistency and prevents agencies from manipulating size standards to avoid RFA compliance or to exclude certain businesses from small business benefits. It provides a single, expert authority on small business definitions.
Case against: Critics might argue that giving the CCA unilateral authority over size standards for all other Acts could undermine the expertise of individual agencies in defining 'small' for their specific regulatory contexts, potentially leading to inappropriate classifications or conflicts.
Estimated impact: Centralizes the power to define 'small business concern' for a vast array of federal laws under the Chief Counsel for Advocacy, affecting eligibility for numerous programs and regulatory protections.